Repealing State Income Taxes is Fiscal Suicide

Posted by: Tim Mathis

This week, the Public Affairs Research Council of Louisiana and Council for a Better Louisiana joined Louisiana Budget Project by opposing Senate Bill 259 proposing to phase out personal income taxes over a ten-year period. The latest House version would cost more than $1.4 billion over the next five years. Once fully implemented, the measure would cost Louisiana $4.8 billion annually.

Barry Erwin, Director of the Council for a Better Louisiana, describes this as “a dangerous game of political chicken, with citizens stuck in the middle.”

Public Affairs Research Council says, “Raising the hopes of citizens that personal income taxes will be reduced without identifying how to fill or close the gap is wimpish.”

“The Legislature needs to stop playing with the fire of tax cuts before we all get burned,” wrote Louisiana Budget Project Director Edward Ashworth in a recent op-ed piece.

Repealing the personal income tax is not fiscal conservatism—it’s fiscal suicide. It would eliminate the largest source of revenue in one of the least taxed states. Income taxes are responsible for raising approximately one-third of state-generated revenue. They are essential to providing stability during economic downturns by decreasing our reliance on more volatile sales and severance taxes. They help balance our tax structure so that lower income families are not overburdened by more regressive sales taxes. They fund research facilities, school-based health care centers, and our world-class universities that improve our standard of living and attract out-of-state businesses.

A complete repeal of the income tax would dwarf the largest tax cuts in state history to date, the Stelly rollbacks in 2007 and 2008 that are largely responsible for Louisiana’s current fiscal crisis. Louisiana can do better for all of its citizens by funding the public institutions that can raise our reputation to become the healthiest and most educated state in the country, rather than trying to win the race to the bottom by being the state with the lowest taxes and worst government services.

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